Australia: Banks lift shares to near three-week high

AUSTRALIAN shares climbed to their highest levels in nearly three weeks on Wednesday (Oct 5), with banks leading gains, as investors found comfort in the central bank’s smaller-than-expected interest rate hike.

The S&P/ASX 200 index closed 1.7 per cent higher at 6,815.7, with major sub-indexes ending in black. The benchmark closed 3.8 per cent higher on Tuesday.

Market sentiment was boosted as the Reserve Bank of Australia (RBA) slowed its pace of raising rates on Tuesday, saying they had already risen substantially, although it added that further tightening would still be needed.

“The RBA’s undersized 25 basis point hike came as a huge relief for equity traders, and hopes that the Fed (US Federal Reserve) could be nearing a pivot of their own... have provided another leg higher for the ASX 200,” said Matt Simpson, senior market analyst at City Index.

Financials gained 2.3 per cent to hit a three-week high, with the country’s four largest banks advancing between 2.1 and 3.4 per cent.

Miners rose 1.3 per cent to notch their highest level since Sep 13. The mining trio BHP Group, Rio Tinto and Fortescue Metals Group added between 1.1 and 2.4 per cent.

Rate-sensitive technology stocks surged 3.9 per cent and tracked an overnight rally among their Wall Street peers. ASX-listed shares of Block and WiseTech Global rose 7.5 per cent and 5.7 per cent, respectively.

Link Administration climbed 6.7 per cent and was among the top gainers in the benchmark index after the share registry firm received a A$1.27 billion (S$1.17 billion) bid from Canada’s Dye & Durham for its corporate markets and banking segments.

In New Zealand, the benchmark S&P/NZX 50 closed 0.8 per cent higher at 11,180.01. The country’s central bank raised interest rates by 50 basis points to a seven-year high of 3.5 per cent and flagged more to come as it struggles to contain stubbornly high inflation.

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Australia: Shares hit near 3-week high on banks, tech boost

“Today’s statement provided little indication of the RBNZ (Reserve Bank of New Zealand) being ready to slow the pace of rate hikes yet,” said Gordon Scott, an economist at RBC Capital Markets in a note.

Scott forecast a final 50 basis point hike at the central bank’s meeting next month. REUTERS